Kelly Services Inc.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 7 May 2026: press release. Guidance figures: 2 new, 1 kept. The quarter’s numbers.

Key takeaways

Revenue fell 10.7% year over year: Revenue from services was $1,040.7 million against $1,164.9 million a year earlier. Underlying decline, excluding discrete items, was about 3.3%, which management said improved 60 basis points on the prior quarter. Source
Operating loss against prior-year earnings: Operating loss was $5.1 million, against earnings of $10.8 million a year earlier. Adjusted earnings from operations were $4.1 million against $22.1 million. Source
Adjusted EBITDA down 54.7%: Adjusted EBITDA was $15.8 million against $34.9 million in the prior-year quarter, a decrease the company reported as 54.7%. Source
Enterprise Talent Management loss: ETM revenue was $459.2 million against $529.1 million. Adjusted business unit profit was a loss of $1.3 million against $9.0 million of profit. Source
Discrete federal and commercial impacts: Discrete impacts from reduced demand from U.S. federal government contractors in SET and three large commercial customers in ETM totaled about 7.4% of revenue. Source
Adjusted EBITDA margin down 150 bps: Adjusted EBITDA margin was 1.5% against 3.0%. Management attributed the decline mainly to ETM, Education and SET, partly offset by volume-related and structural expense actions. Source
Free cash flow negative $26.5 million: Operating cash flow was negative $25.4 million against positive $23.9 million, with capital expenditures of $1.1 million. Source

“In the first quarter, Kelly’s disciplined execution against our growth and efficiency priorities continued to stabilize the business.”
Chris Layden, chief executive officer

Guidance

Area	Period	Figure	Against last quarter
Revenue Source	Second quarter of 2026	decline of 7% to 9%	New
Adjusted EBITDA margin Source	Second quarter of 2026	at least 2.5%	New
Quarterly dividend Source	Dividend payable June 2, 2026	$0.075 per share	Kept

What changed from last quarter

Guidance kept: The 2026 financial guidance is stated as unchanged from the initial view previously disclosed. Source
New: Controlling shareholder change occurred in the first quarter of 2026, with related transaction costs. Source
New: Segment leader changes took place in 2025 and 2026. Source

Results and revenue trends

Revenue fell 10.7% year over year: Revenue from services was $1,040.7 million against $1,164.9 million a year earlier. Underlying decline, excluding discrete items, was about 3.3%, which management said improved 60 basis points on the prior quarter. Source
Operating loss against prior-year earnings: Operating loss was $5.1 million, against earnings of $10.8 million a year earlier. Adjusted earnings from operations were $4.1 million against $22.1 million. Source
Adjusted earnings per share fell: Diluted loss per share was $0.17 against earnings of $0.16. Adjusted diluted earnings per share were $0.03 against $0.39, and adjusted net earnings were $1.0 million against $14.3 million. Source
Adjusted EBITDA down 54.7%: Adjusted EBITDA was $15.8 million against $34.9 million in the prior-year quarter, a decrease the company reported as 54.7%. Source

Segment performance

Enterprise Talent Management loss: ETM revenue was $459.2 million against $529.1 million. Adjusted business unit profit was a loss of $1.3 million against $9.0 million of profit. Source
Science, Engineering and Technology decline: SET revenue was $289.2 million against $327.3 million. Adjusted business unit profit was $14.5 million against $15.0 million, with gross profit rate of 24.8%. Source
Education revenue and profit lower: Education revenue was $294.1 million against $309.0 million. Adjusted business unit profit was $12.4 million against $19.3 million, with gross profit rate of 13.3% against 15.0%. Source

“we remain confident in our ability to deliver revenue growth and margin expansion in the second half of the year.”
Chris Layden, chief executive officer

Service mix and demand

Talent solutions revenue rose: Talent solutions revenue was $121.3 million against $117.8 million. Staffing services revenue was $691.3 million against $793.5 million. Source
Outcome-based and placement revenue lower: Outcome-based services revenue was $219.0 million against $242.6 million. Permanent placement income was $10.9 million against $11.5 million. Source
Discrete federal and commercial impacts: Discrete impacts from reduced demand from U.S. federal government contractors in SET and three large commercial customers in ETM totaled about 7.4% of revenue. Source
ETM demand improved across specialties: Management said demand improved in ETM, with growth in each talent solutions specialty. SET grew in Telecom and improved sequentially in Science and Engineering. Source
Technology and other SET demand lower: Lower demand in SET's other specialties, largely technology, and a decline in Education were cited as offsetting the favorable areas. Source

Costs and expense actions

Adjusted SG&A fell 10.3%: Adjusted SG&A expenses were $192.3 million against $214.4 million. Management described this as the third straight quarter of reduction of about 10% or more. Source
Integration charges lower: Integration, realignment and restructuring charges were $4.7 million against $10.7 million. IT-related charges were $3.5 million against $5.3 million. Source
Lease-related impairment charge: An asset impairment charge of $2.2 million relates to certain right-of-use assets, reflecting ongoing realignment of the lease portfolio. The prior-year quarter had no such charge. Source

Margins, earnings and tax

Adjusted EBITDA margin down 150 bps: Adjusted EBITDA margin was 1.5% against 3.0%. Management attributed the decline mainly to ETM, Education and SET, partly offset by volume-related and structural expense actions. Source
Gross profit rate eased: Gross profit rate was 18.9% against 20.3%. Gross profit was $196.4 million against $236.5 million. Source
Business unit adjusted margins diverge: Adjusted EBITDA margin was negative 0.3% in ETM, 5.0% in SET and 4.2% in Education. Source
Tax benefit on pre-tax loss: Income tax was a benefit of $0.8 million against expense of $1.8 million. The effective tax rate was 11.6% against 24.0%. Source

Cash flow and balance sheet

Free cash flow negative $26.5 million: Operating cash flow was negative $25.4 million against positive $23.9 million, with capital expenditures of $1.1 million. Source
Collection days rose: Global days sales outstanding was 64 days against 61 at year-end and 61 a year earlier. Trade receivables were $1,216.0 million. Source
Debt higher, debt-to-capital up: Long-term debt was $130.5 million against $101.9 million at year-end. Debt-to-capital was 11.9% against 9.4%, with debt proceeds of $389.5 million and repayments of $360.9 million. Source
Cash balance and exchange effect: Cash and equivalents were $25.6 million against $33.0 million at year-end. The effect of exchange rates on cash was negative $5.8 million. Source

Capital and shareholder returns

Dividend payments of $2.7 million: Dividend payments were $2.7 million, against $2.8 million a year earlier. Debt proceeds and repayments are shown in the financing section. Source
Average diluted shares lower: Average diluted shares were 34.4 million against 35.5 million a year earlier. Source
Stockholders' equity lower: Total stockholders' equity was $968.5 million against $976.5 million at year-end, with earnings invested in the business at $956.5 million against $965.1 million. Source

Strategy, leadership and ownership

Acquisition integration costs continue: Restructuring charges relate to integrating MRP and other prior acquisitions and aligning processes and technology across the company. Source
Executive transition costs excluded: Executive transition costs of $1.5 million were excluded from adjusted SG&A, against $0.3 million a year earlier; management called them non-recurring. Source
Technology and go-to-market on track: Management said its technology modernization and go-to-market initiatives are on track and its pipeline is gaining momentum. Source

Coming up, as management said on 7 May 2026

Dividend payable June 2: The $0.075 dividend is payable June 2, 2026 to holders of record at the close of business on May 18, 2026. Source

Figures management reported

Figure	Reported
Talent solutions revenue Source	$121.3 million
Outcome-based services revenue Source	$219.0 million

Risks management discussed

Demand: Reduced demand from U.S. federal government contractors in SET and three large commercial customers in ETM were named as discrete impacts on revenue. Source
Demand: Education declined on delayed contract decisions, weather-related school closures and lower enrollment in key markets. Source
Demand: Continued lower demand in SET's other specialties, largely technology, was cited as a drag on revenue. Source
Financial: Near-term margin pressure in ETM, Education and SET reflects lower gross margins and timing of revenue trends. Source
Financial: Free cash flow was negative in the quarter, with operating cash flow below prior-year levels. Source
External: The 2026 guidance assumes no material change in macroeconomic or industry dynamics relative to current trends. Source

Earlier plans management reported on

Ahead: Prior guidance for first-quarter revenue decline of 11% to 13%; management said revenue exceeded its expectations.
Not stated: Management affirmed expectation of improved year-over-year revenue and adjusted EBITDA margin each successive quarter in 2026. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Kelly Reports

First-Quarter 2026 Earnings

TROY, Mich. (May 7, 2026) - Kelly (Nasdaq: KELYA, KELYB), a leading specialty talent solutions provider, today announced results for the first quarter of 2026.

Q1 revenue of $1.0 billion, reflects notable improvement in the year-over-year performance versus the prior quarter driven by strength in the ETM segment, down 10.7% year-over-year; underlying revenue excluding previously disclosed discrete items down approximately 3.3% year-over-year, which improved 60 basis points versus the prior quarter
Q1 adjusted SG&A decline of 10.3% reflects the third straight quarter of year-over-year reduction of approximately 10% or more and continued momentum on structural and demand-driven expense optimization initiatives
Q1 operating loss of $5.1 million; $4.1 million of operating earnings on an adjusted basis
Q1 adjusted EBITDA of $15.8 million and adjusted EBITDA margin of 1.5% reflects a 20 basis point improvement in the year-over-year decline relative to the prior quarter
Company affirms expectation of improved year-over-year performance for revenue and adjusted EBITDA margin each successive quarter in 2026, and return to organic revenue growth and adjusted EBITDA margin expansion in the second half of 2026

Chris Layden, chief executive officer, said, “In the first quarter, Kelly’s disciplined execution against our growth and efficiency priorities continued to stabilize the business. Revenue exceeded our expectations and adjusted EBITDA was in line with our outlook, driven by sequential improvement in ETM and pockets of growth in SET. With our technology modernization and go-to-market initiatives on track and our pipeline continuing to gain momentum, we remain confident in our ability to deliver revenue growth and margin expansion in the second half of the year.”

Financial Results for the thirteen-week period ended March 29, 2026:

Revenue of $1.0 billion, a 10.7% decrease compared to the corresponding quarter of 2025. Discrete impacts associated with the previously disclosed reduced demand for U.S. federal government contractors in the SET segment and from three large commercial customers in the ETM segment totaled approximately 7.4%, resulting in an underlying revenue decline of approximately 3.3%. Favorable performance areas within underlying revenue include improved demand in the ETM segment, including growth in each of the talent solutions specialties, and within the SET segment growth in the Telecom specialty and improved sequential performance in the Science and Engineering specialties. More than offsetting these items are continued lower demand in the other specialties within the SET segment, largely the technology specialty, and a decline in the Education segment driven by delayed contract decisions, elevated weather-related school closures and declines in student enrollment in key markets.

Operating loss of $5.1 million, compared to earnings of $10.8 million reported in the first quarter of 2025. Adjusted earnings were $4.1 million in the first quarter of 2026 and $22.1 million in the first quarter of 2025. Adjusted EBITDA of $15.8 million, a decrease of 54.7% versus the prior year period. Adjusted EBITDA margin of 1.5%, a decrease of 150 basis points (“bps”) driven primarily by near-term margin pressure in ETM, Education, and SET reflecting lower gross margins and timing of revenue trends, partially offset by volume-related and structural expense management actions including benefits from our acquisition integration and technology modernization efforts.

Income tax benefit of $0.8 million, compared to income tax expense of $1.8 million reported in the first quarter of 2025. On an adjusted basis, income tax expense of $1.5 million, compared to income tax expense of $4.7 million in the first quarter of 2025.

Loss per share was $0.17 compared to earnings per share of $0.16 in the first quarter of 2025. On an adjusted basis, earnings per share were $0.03 in the first quarter of 2026 compared to $0.39 per share in the corresponding quarter of 2025.

Adjusted measures represent non-GAAP financial measures. Refer to our reconciliation of non-GAAP financial measures to the most closely related GAAP measure included in this document.

Financial Outlook For Fiscal 2026:

The Company's 2026 financial outlook remains unchanged from the initial view previously disclosed, assumes no material change in the macroeconomic or industry dynamics relative to current trends, and is as follows:

Second Quarter of 2026 - Expect year-over-year improvement relative to first quarter, with overall revenue decline of 7% to 9%, which includes at least 100 bps of improvement on an underlying basis excluding discrete customer impacts. Adjusted EBITDA margin of at least 2.5%, representing approximately 100 bps improvement relative to first quarter and significant reduction in year-over-year decline relative to the past two quarters.
Second Half of the Year - Assuming no new material impacts, expect relative improvement in year-over-year performance each successive quarter for both revenue and adjusted EBITDA margin resulting in modest year-over-year revenue growth and measurable adjusted EBITDA margin expansion in the second half of the year.

Quarterly Cash Dividend:

Kelly also reported that on May 5, its board of directors declared a dividend of $0.075 per share. The dividend is payable on June 2, 2026 to stockholders of record as of the close of business on May 18, 2026.

In conjunction with its earnings release, Kelly has published a financial presentation and will host a live webcast of a conference call at 9 a.m. ET on May 7 to review the financial and operation results from the quarter. The presentation and a link to the live webcast will be accessible through the Company’s public website on the Investor Relations page under Events & Presentations. The webcast will be recorded, and a replay will be available within one hour of completion of the event through the same link as the live webcast.

Forward-Looking Statements:

Forward-looking statements notice

This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly’s financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, competitive pressures and pricing, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business’s anticipated growth strategies, (vii) our future business development, results of operations and financial condition, (viii) damage to our brands, (ix) dependence on third parties for the execution of critical functions, (x) conducting business in foreign countries, including foreign currency fluctuations, (xi) availability of temporary workers with appropriate skills required by customers, (xii) cyberattacks or other breaches of network or information technology security, and (xiii) other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

About Kelly®

Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect approximately 375,000 people with work every year. Our suite of outsourcing and consulting services and solutions ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2025 was $4.3 billion. Learn more at kellyservices.com.

KLYA-FIN

ANALYST & MEDIA CONTACT:

Scott Thomas

(248) 251-7264

scott.thomas@kellyservices.com

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE 13 WEEKS ENDED MARCH 29, 2026 AND MARCH 30, 2025

(UNAUDITED)

(in millions, except per share data)

	2026		2025		Change		% Change
Revenue from services	$1,040.7		$1,164.9		$(124.2)		(10.7)%
Cost of services	844.3		928.4		(84.1)		(9.1)
Gross profit	196.4		236.5		(40.1)		(17.0)
Selling, general and administrative expenses	199.3		225.7		(26.4)		(11.7)
Asset impairment charge	2.2		-		2.2		NM
Earnings (loss) from operations	(5.1)		10.8		(15.9)		NM
Other income (expense), net	(1.6)		(3.2)		1.6		50.0
Earnings (loss) before taxes	(6.7)		7.6		(14.3)		NM
Income tax expense (benefit)	(0.8)		1.8		(2.6)		(144.4)
Net earnings (loss)	$(5.9)		$5.8		(11.7)		NM
Basic earnings (loss) per share	$(0.17)		$0.16		$(0.33)		NM
Diluted earnings (loss) per share	$(0.17)		$0.16		$(0.33)		NM
STATISTICS:
Permanent placement income (included in revenue from services)	$10.9		$11.5		$(0.6)		(5.2)%
Gross profit rate	18.9%		20.3%		(1.4)	pts.
Adjusted EBITDA	$15.8		$34.9		$(19.1)		(54.7)%
Adjusted EBITDA margin	1.5%		3.0%		(1.5)	pts.
Effective income tax rate	11.6%		24.0%		(12.4)	pts.
Average shares outstanding:
Basic		34.4		35.0
Diluted		34.4		35.5

Reported percentage changes are computed based on millions. Prior year percent changes were computed based on actual amounts in thousands.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions)

	March 29, 2026		December 28, 2025		March 30, 2025
Current Assets
Cash and equivalents	$25.6		$33.0		$28.2
Trade accounts receivable, less allowances of $10.8, $10.0 and $10.6, respectively	1,216.0		1,188.7		1,250.9
Prepaid expenses and other current assets	57.2		46.6		71.9
Total current assets	1,298.8		1,268.3		1,351.0
Noncurrent Assets
Property and equipment, net	18.8		20.5		23.7
Operating lease right-of-use assets	37.6		42.9		45.9
Deferred taxes	158.2		163.2		331.1
Retirement plan assets	283.0		289.7		253.8
Goodwill, net	202.1		202.1		304.1
Intangibles, net	218.8		226.2		248.4
Other assets	37.7		37.7		36.9
Total noncurrent assets	956.2		982.3		1,243.9
Total Assets	$2,255.0		$2,250.6		$2,594.9
Current Liabilities
Accounts payable and accrued liabilities	$621.6		$631.4		$597.0
Operating lease liabilities	11.4		12.3		12.2
Accrued payroll and related taxes	147.2		140.9		178.7
Accrued workers' compensation and other claims	21.3		20.9		18.0
Income and other taxes	17.1		16.3		17.0
Total current liabilities	818.6		821.8		822.9
Noncurrent Liabilities
Long-term debt	130.5		101.9		204.6
Operating lease liabilities	42.0		44.9		49.3
Accrued workers' compensation and other claims	34.7		34.2		32.0
Accrued retirement benefits	253.6		263.7		236.4
Other long-term liabilities	7.1		7.6		9.2
Total noncurrent liabilities	467.9		452.3		531.5
Commitments and contingencies (see Contingencies footnote)
Stockholders' Equity
Common Stock	38.5		38.5		38.5
Treasury Stock	(56.7)		(63.7)		(56.1)
Paid-in capital	31.1		36.3		30.5
Earnings invested in the business	956.5		965.1		1,233.2
Accumulated other comprehensive income (loss)	(0.9)		0.3		(5.6)
Total stockholders' equity	968.5		976.5		1,240.5
Total Liabilities and Stockholders' Equity	$2,255.0		$2,250.6		$2,594.9
STATISTICS:
Working Capital	$480.2		$446.5		$528.1
Current Ratio		1.6		1.5		1.6
Debt-to-capital %	11.9%		9.4%		14.2%
Global Days Sales Outstanding	64		61		61
Year-to-Date Free Cash Flow	$(26.5)		$114.1		$21.4

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE 13 WEEKS ENDED MARCH 29, 2026 AND MARCH 30, 2025

(UNAUDITED)

(in millions)

	2026	2025
Cash flows from operating activities:
Net earnings (loss)	$(5.9)	$5.8
Adjustments to reconcile net earnings to net cash from operating activities:
Asset impairment charge	2.2	-
Deferred income taxes	5.0	(0.8)
Depreciation and amortization	9.9	11.0
Operating lease asset amortization	2.6	2.6
Provision for credit losses and sales allowances	1.2	3.0
Stock-based compensation	3.4	3.7
Other, net	0.3	(0.3)
Changes in operating assets and liabilities
Accounts receivable	(26.3)	10.5
Other assets	(4.5)	0.6
Accounts payable	(7.3)	(24.2)
Other liabilities	(6.0)	12.0
Net cash (used in) from operating activities	(25.4)	23.9
Cash flows from investing activities:
Capital expenditures	(1.1)	(2.5)
Proceeds from sale of PersolKelly investment	-	6.4
Other investing activities	(0.1)	(0.7)
Net cash (used in) from investing activities	(1.2)	3.2
Cash flows from financing activities:
Proceeds from long-term debt	389.5	412.3
Payments on long-term debt	(360.9)	(447.1)
Dividend payments	(2.7)	(2.8)
Payments of tax withholding for stock awards	(1.4)	(1.8)
Other financing activities	(0.3)	(0.1)
Net cash from (used in) financing activities	24.2	(39.5)
Effect of exchange rates on cash, cash equivalents and restricted cash	(5.8)	1.3
Net change in cash, cash equivalents and restricted cash	(8.2)	(11.1)
Cash, cash equivalents and restricted cash at beginning of period	37.7	45.6
Cash, cash equivalents and restricted cash at end of period	$29.5	$34.5

	First Quarter
	2026	2025	% Change
KELLY SERVICES, INC.
SEGMENT INFORMATION
(UNAUDITED)
(in millions)
We utilize business unit profit (loss) to evaluate the performance of our segments. Business unit profit (loss) and SG&A expenses as presented in the segment information table below do not include depreciation and amortization expenses.
Enterprise Talent Management
Revenue from services	$459.2	$529.1	(13.2)%
Gross profit	85.6	107.3	(20.2)
Adjusted SG&A expenses	86.9	98.3	(11.6)
Integration, realignment and restructuring charges	-	2.7		NM
Total SG&A expenses	86.9	101.0	(14.0)
Business unit profit (loss)	(1.3)	6.3		NM
Adjusted business unit profit (loss)	(1.3)	9.0		NM
Gross profit rate	18.6%	20.3%	(1.7)	pts.
Science, Engineering & Technology
Revenue from services	$289.2	$327.3	(11.6)%
Gross profit	71.8	83.0	(13.5)
Adjusted SG&A expenses	57.3	68.0	(15.7)
Integration, realignment and restructuring charges	0.3	1.1	(72.7)
Total SG&A expenses	57.6	69.1	(16.6)
Asset impairment charge	2.2	-		NM
Business unit profit (loss)	12.0	13.9	(13.7)
Adjusted business unit profit (loss)	14.5	15.0	(3.3)
Gross profit rate	24.8%	25.4%	(0.6)	pts.
Education
Revenue from services	$294.1	$309.0	(4.8)%
Gross profit	39.0	46.2	(15.6)
Adjusted SG&A expenses	26.6	26.9	(1.1)
Integration, realignment and restructuring charges	0.1	-		NM
Total SG&A expenses	26.7	26.9	(0.7)
Business unit profit (loss)	12.3	19.3	(36.3)
Adjusted business unit profit (loss)	12.4	19.3	(35.8)
Gross profit rate	13.3%	15.0%	(1.7)	pts.

	First Quarter 2026
	Staffing Services	Outcome-based Services	Talent Solutions	Permanent Placement	Total
KELLY SERVICES, INC.
REVENUE FROM SERVICES BY SERVICE TYPE
(UNAUDITED)
(in millions)
Enterprise Talent Management	$229.3	$106.8	$121.3	$1.8	$459.2
Science, Engineering & Technology	168.6	112.2	-	8.4	289.2
Education	293.4	-	-	0.7	294.1
Total Segment Revenue	$691.3	$219.0	$121.3	$10.9	$1,042.5
Intersegment					(1.8)
Total Revenue from Services					$1,040.7

	First Quarter 2025
	Staffing Services	Outcome-based Services	Talent Solutions	Permanent Placement	Total
Enterprise Talent Management	$275.8	$133.2	$117.8	$2.3	$529.1
Science, Engineering & Technology	209.8	109.4	-	8.1	327.3
Education	307.9	-	-	1.1	309.0
Total Segment Revenue	$793.5	$242.6	$117.8	$11.5	$1,165.4
Intersegment					(0.5)
Total Revenue from Services					$1,164.9

	First Quarter
KELLY SERVICES, INC.
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(in millions, except per share data)
Adjusted SG&A Expenses:		2026		2025
As reported	$199.3		$225.7
Integration, realignment and restructuring charges	(4.7)		(10.7)
Transaction costs	(0.8)		(0.3)
Executive transition costs	(1.5)		(0.3)
Adjusted SG&A expenses	$192.3		$214.4

	First Quarter
Adjusted earnings (loss) from operations:		2026		2025
As reported	$(5.1)		$10.8
Integration, realignment and restructuring charges	4.7		10.7
Transaction costs	0.8		0.3
Executive transition costs	1.5		0.3
Asset impairment charge	2.2		-
Adjusted earnings from operations	$4.1		$22.1

	First Quarter
Adjusted income tax expense (benefit):		2026		2025
Income tax expense (benefit)	$(0.8)		$1.8
Taxes on integration, realignment and restructuring charges	1.2		2.7
Taxes on transaction costs	0.2		0.1
Taxes on executive transition costs	0.4		0.1
Taxes on asset impairment charge	0.5		-
Adjusted income tax expense (benefit)	$1.5		$4.7

	First Quarter
Adjusted net earnings and earnings per share:		2026		2025
Net earnings (loss)	$(5.9)		$5.8
Integration, realignment and restructuring charges, net of taxes	3.5		8.0
Transaction costs, net of taxes	0.6		0.3
Executive transition costs, net of taxes	1.1		0.2
Asset impairment charge, net of taxes	1.7		-
Adjusted net earnings	$1.0		$14.3
Diluted earnings (loss) per share	$(0.17)		$0.16
Adjusted diluted earnings per share	$0.03		$0.39

Note: Earnings per share amounts for each quarter are required to be computed independently and may not equal the amounts computed for the total year. Adjusted diluted earnings per share reflects the impact of potentially dilutive securities.

	First Quarter
KELLY SERVICES, INC.
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
(in millions)
Total Adjusted EBITDA:		2026		2025
Net earnings (loss)	$(5.9)		$5.8
Other (income) expense, net	1.6		3.1
Income tax expense (benefit)	(0.8)		1.8
Depreciation and amortization	11.7		12.8
EBITDA	6.6		23.5
Integration, realignment and restructuring charges	4.7		10.7
Transaction costs	0.8		0.4
Executive transition costs	1.5		0.3
Asset impairment charge	2.2		-
Adjusted EBITDA	$15.8		$34.9
Adjusted EBITDA margin	1.5%		3.0%

	First Quarter 2026
Business Unit Adjusted EBITDA:	Enterprise Talent Management	Science, Engineering & Technology	Education
Business unit profit (loss)	$(1.3)	$12.0	$12.3
Integration, realignment and restructuring charges	-	0.3	0.1
Asset impairment charge	-	2.2	-
Adjusted EBITDA	$(1.3)	$14.5	$12.4
Adjusted EBITDA margin	(0.3)%	5.0%	4.2%
	First Quarter 2025
	Enterprise Talent Management	Science, Engineering & Technology	Education
Business unit profit (loss)	$6.3	$13.9	$19.3
Integration, realignment and restructuring charges	2.7	1.1	-
Adjusted EBITDA	$9.0	$15.0	$19.3
Adjusted EBITDA margin	1.7%	4.6%	6.2%

	First Quarter
Free cash flows:		2026		2025
Net cash (used in) from operating activities	$(25.4)		$23.9
Capital expenditures	(1.1)		(2.5)
Free Cash Flow	$(26.5)		$21.4

RECONCILIATION OF NON-GAAP MEASURES

(UNAUDITED)

Management uses adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) and adjusted EBITDA Margin (percent of total GAAP revenue) which Management believes is useful to compare operating performance compared to prior periods and uses it in conjunction with GAAP measures to assess performance. Our calculation of adjusted EBITDA may not be consistent with similarly titled measures of other companies and should be used in conjunction with GAAP measurements. Management also uses year-to-date free cash flow (operating cash flows less capital expenditures) to indicate the change in cash balances arising from operating activities, net of working capital needs and expenditures on fixed assets.

Management believes that the non-GAAP (U.S. Generally Accepted Accounting Principles) information excluding items such as integration, realignment and restructuring charges, transaction costs, executive transition costs and asset impairment charges are useful to understand the Company's fiscal 2026 financial performance and increases comparability. Specifically, Management believes that removing the impact of these items allows for a meaningful comparison of current period operating performance with the operating results of prior periods. Management also believes that such measures are used by those analyzing performance of companies in the staffing industry to compare current performance to prior periods and to assess future performance.

These non-GAAP measures may have limitations as analytical tools because they exclude items which can have a material impact on cash flow and earnings per share. As a result, Management considers these measures, along with reported results, when it reviews and evaluates the Company's financial performance. Management believes that these measures provide greater transparency to investors and provide insight into how Management is evaluating the Company's financial performance. Non-GAAP measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

(1) Represents total company depreciation and amortization of intangibles, including the amortization of hosted software.

(2) Integration, realignment and restructuring charges in the first quarter 2026 and 2025 reflect various initiatives aimed at integrating MRP and other prior acquisitions and further aligning processes and technology across the Company. The costs incurred associated with these initiatives are summarized in the table below:

	First Quarter
	2026	2025
IT-related charges	$3.5	$5.3
Severance	0.3	4.4
Fees and other costs	0.9	1.0
Total integration and realignment costs	$4.7	$10.7

(3) Transaction costs in 2026 primarily related to costs incurred in connection with our controlling shareholder change in the first quarter of 2026. Transaction costs in 2025 include costs incurred directly related to the sale of the EMEA staffing operations, which includes employee termination costs and transition costs.

(4) Executive transition costs in 2026 represent non-recurring expenses primarily associated with our segment leader changes in 2025 and 2026. Executive transition costs in 2025 represent expenses associated with our CEO transition in 2025.

(5) Asset impairment charge in 2026 relates to certain right-of-use assets and reflects the Company’s ongoing realignment of our lease portfolio.